These days, there is significant risk exposure related to many aspects in life and non-life sectors. Risk exposed units as any kinds of objects, individuals, corporate bodies and/or legal entities, necessarily are confronted with many forms of active and passive risk management to hedge and protect against the risk of certain losses and events. In the prior art, one way to address such risk of loss is based on transferring and pooling the risk of loss from a plurality of risk exposed entities to a dedicated pooling entity. In essence, this can be executed by effectively allocating the risk of loss to this pooling unit or entity by pooling resources of associated units, which are exposed to a certain risk. In case, that one of the units is hit by an event occurring related to a transferred risk, the pooling entity directly intercepts the loss or damage caused by the event by transferring resources from the pooled resources to the affected unit. Pooling of resources can be achieved by exchanging predefined amounts of resources with the resource-pooling system; e.g. payments or premiums to be paid, for the transfer of the risk. This means that predefined amounts of resources are exchanged for the other unit assuming the risk of loss.
For living individuals, a special kind of risk is based on the risk of loss of life and related possible losses; i.e., losses that occur as a consequence of the death of that individual. Such risks are traditionally handled by so-called life insurance systems. To administer a loss for benefits provided by a life insurance policy, a substantial amount of information must be collected and managed by the pooling entity in order to allow risk-transfer. Appropriate documentation must be identified, captured and analyzed, such as death certificates or medical provider verification of condition or service in the cases of health/supplementary health. One important problem arises by the fact that life insurance methods are triggered by the death of the unit, which risk is transferred. However, often problems arise for an individual before then, in that financial resources were threatened by losses occurring prior to death as a consequence of the events leading to death. This is mostly the case when the individual suffers from potentially terminal disease, like malignant cancer, which may inevitably lead to the death of the individual. Typically, the patient is confronted with increasing costs for medical treatment or other related costs as travel expenses or additional heating costs, but also by the decreasing ability to earn the money needed to fulfill their monthly financial needs. This may lead to the necessity of having to make many sacrifices; e.g. taking children out of private schools, selling their house and filling for bankruptcy. All these financial concerns contrariwise impacted on their health. Recovery is delayed, stress additionally aggravates the anyway poor health.
As a solution, resource-pooling systems were developed that cover such “critical illnesses”, where the resource-pooling unit operated by the insurer provides a lump sum cash payment if the risk-exposed unit, which is, seen from the perspective of the insurer the policyholder, is diagnosed with one of the critical illnesses listed in a defined table of transferred risk. The operation of the resource-pooling system may also be structured to pay out regular income, and the payouts may also benefit the policyholder undergoing a surgical procedure, for example, having a heart bypass operation. Typically, such systems require the risk-exposed unit to survive a minimum number of days (the so-called survival period) from when the illness was first diagnosed. The survival period can vary; however, 14 days is the most commonly used survival period used. In the Australian market, survival periods are set between 8-14 days. However, systems as e.g. automated systems associated with indemnity based on accelerated payment (e.g. related to specific life insurance products) and stand alone products, are also known. The terms, as defined for the risk transfer, typically contain specific predefined triggers or rules to be applied that provide the basis for the determination of when a diagnosis of a critical illness is considered valid. Terms for survival periods may also define parameters providing that the diagnosis need to be made by a physician who specializes in the treatment of that illness or condition or name specific tests, e.g. ECG changes in case of a myocardial infarctions, that confirm the diagnosis. In many markets, the trigger parameters for many of the diseases and conditions have become standardized; thus typically resource-pooling systems would use the same definition (cf. stand alone products and accelerated critical illness systems). The standardization of the critical illness definitions serves many purposes, including better clarity of coverage for the risk-exposed units and greater comparability of terms and conditions for risk transfers among different resource-pooling systems. Such terms and conditions are often defined in the policy covering the risk transfer. For example, in the UK the Association of British Insurers (ABI) has issued a Statement of Best Practice, which includes a number of standard definitions for common critical illnesses. The prior art also provides for alternative methods of critical illness risk transfer, other than the lump sum cash payment method. These critical illness insurance systems can directly pay health providers (as e.g. “tiers payant” systems) for the treatment costs involving critical and life-threatening illnesses that are covered by the policyholder's insurance policy, including fees for specialists and procedures at a select group of high-ranking hospitals up to a certain amount per course of treatment as set out in the policy, but also transfer the payment to the customer.
In the prior art, critical illnesses are typically covered by critical illness risk transfer; these are heart attack, cancer, stroke and coronary artery by-pass surgery. Examples of other conditions that might be covered include: Alzheimer's disease, blindness, deafness, kidney failure, major organ transplant, multiple sclerosis, HIV/AIDS contracted by blood transfusion or during an operation, Parkinson's disease, paralysis of limb, terminal illness. One of the problems of the risk transfer system as provided by the prior art lies in the fact that the incidence of a condition may vary (i.e. in- or decrease) over time, and that diagnosis and treatment may improve over time, that the financial need to cover some illnesses deemed critical a decade ago is no longer considered necessary today. Likewise, some of the conditions covered today may no longer need to be covered a decade or so from now. It is very difficult to adapt the prior art systems to such changing conditions. What is clear is the fact that the financial hardship at the time of diagnosis and afterwards increases during the course of treatment, which seldom can be meet by the present systems. Furthermore, operating the systems of the prior art requires a high level of human resources, because these systems cannot be adequately automated. Therefore, a large quantity of the pooled resources are used by the resource-pooling system itself to administer the risk transfer, which makes the risk transfer expensive for the risk-exposed unit. Finally, another problem comes from the fact that, due to the medical progress, many patients no longer die but can survive for many years after undergoing treatment for a heart attack, stroke and cancer. Due to the long survival period, such individuals, who were struck already once by a critical illness, continue to be exposed to the risk of a second or consequential occurrence of a critical illness. In fact, the risk typically does not decrease, since the health of these patients is already weakened by the first incidence of a critical illness. Since critical illnesses are traditionally meant to lead to death, the risk involving such individuals, who may be affected by a second or even more critical illnesses is no longer covered by the resource-pooling system. Therefore, although the patient survived his first bout with a critical illness, he may, at least financially, not survive the second time.